Interview: Lean Enterprise Institute CEO John Shook

A former Toyota Motor Corp. executive and current CEO of the Cambridge, Mass.-based Lean Enterprise Institute, John Shook is a driving force in the spread of lean management in American corporate culture. During a recent visit to the Fisher College of Business to teach its Master of Business Operational Excellence cohort, Shook took time to talk with the Center for Operational Excellence about his own journey and what he sees in the future of lean.

What about your time at Toyota made it click for you, made you realize you wanted to take lean to other companies?

My first deep exposure doing this was working on a joint venture with Toyota and GM, so I saw immediately and up close and personal exactly how powerful (lean) could be. It was at a time when GM was struggling, in the early 1980s, and it was at a time when Toyota still had a lot to learn about how to operate globally. So being there to be a part of the interaction of those two companies and to see the transformation that could happen through actualizing this system in a very traditional setting, it was very clear to anyone who was able to see that process take place back almost 30 years ago. Now, I think the power of it was undeniable, but in spite of that many people still did try to deny it. The real question was: How can we bring about this change to make things better for everyone involved in a business system? It’s something we’re still learning about even 30 years later.

What surprised you most about the process itself?

I think over time the thing that may have surprised me the most was to find (lean) can apply to any kind of work in any situation. When I first learned about it, it was through doing so it was a matter of small learnings occurring every day. It seemed very natural to me and I couldn’t imagine why you’d do things differently. I learned in a traditional manufacturing environment and never necessarily thought how it might work for knowledge workers or health care or in government, very different settings like that. When I first began to see that kind of progress taking place 15 years or so ago it was quite eye-opening.

That’s when that branching out began?

About 10 years ago, and really the last six or seven years, it has started to explode. First, it was experiments in health care … and it was slow-going for several years. But now that it’s become an undeniable movement in health care and organization after organization is embracing this way to improve care for patients and improve their costs … I think the evidence of how it can work in health care is going to have a spillover effect to other industries and other areas of work as well.

What major changes have you seen in continuous improvement just in the past few years?

Seeing new applications and people thinking in different ways, in some ways led by health care. Now you see a lot of interesting government projects. I recently met a man who was director of lean management for the state of Maine. That’s pretty amazing to see. People are thinking about how to apply this to new business models. There’s a book called The Lean Startup that instead of reworking companies to fit lean thinking let’s have lean thinking be embodied in the development from the ground up from the very beginning. That’s pretty exciting. What we have now is more and more people taking this thinking and extending it to new frontiers. Health care was a new frontier and now there’s no turning back. So many organizations have embraced this, from physicians to nurses to hospital administrators – and they never want to go back to the traditional ways of working. I think we’re going to see that extend into other areas as well, such as government and retail.

So retail is largely untapped at this point?

Retail is largely untapped and I suspect retail will be one of the next frontiers to embrace this. I expect it to take off in retail the same way it did in health care. The early organizations that do embrace this, they’ll be the first few to have a great competitive advantage.

Lean has been shown time and time again to work. Why don’t companies embrace it?

It’s a big change, it’s a personal change, it’s an organizational change and in some areas people really haven’t heard about it. Getting started is the hardest part, finding ways to simply get the ball rolling. Someone has to do something first and it’s ultimately a matter of individuals. All change takes place at the individual level. Individuals have to decide change will start today with me. That’s what happened in health care. There were a few pioneering individuals who learned about this, and often it’s a matter of happenstance. Once they learn about it they see something there, see a kernel of hope, something that could be great to apply to their industry. And they decide to go and learn more. We need explorers in every industry. Once people start exploring they will discover the power of this way of thinking about work, this way of thinking about how the organization can accomplish its purpose.

How much of that initial push to think lean rests with management and how much is in the day-to-day operations?

I think any change theory probably talks about the role of leadership, and you have to have leaders leading the change. I won’t deny that’s part of what takes within lean transformation. But I can observe that what’s characteristic of a lean transformation is a focus on actual operational change, change in a way we do work. Without that dimension it’s very easy for change to become an abstract theory that may be discussed amongst top leaders. Until change is embodied in actual work it’s still hypothetical. Both things need to occur. Which needs to occur first? I don’t know if that question matters so much. It’s the fact that both have to occur. With leadership enlightenment first, the leader’s challenge is how can I make operational changes and how can I make change in the actual work, on the gemba? If the inspiration comes at the gemba, on the front lines, as things improve it occurs that the challenge will become how to engage top leadership and how to make senior leadership fully cognizant of the power of the changes being brought about at the gemba. Where you start – at the gemba or with senior leadership – the other will be the challenge to be met.

How would you like to see A3s get incorporated into the problem-solving process?

What we’d like to see is organizations become institutions that encourage and develop problem-solvers and encourage problem-solving in everything they do. The A3 is a great process to enable good problem-solving but also to develop good problem-solvers. Companies that embrace the A3 process are seeing tremendous results, both in operational improvements as evidenced by improved quality and lower cost but also in a change in culture. The real objective here is problem-solving and the engagement of all people in an organization in solving problems they own. The A3 is a means to help that.

What are the most common mistakes companies make in incorporating A3s?

The most common mistake companies make regarding A3s is the same most common mistake they make regarding lean tools. The point, the real objective is something deeper and it underlies the process, the tool itself. All lean tools and processes are like an iceberg – there’s more underneath them that embody different ways of thinking and going about work, and if we just copy the tools it’s possible for us to miss that and be implementing the tool for the tool’s sake. There’s an old saying referring to hammers looking for nails. In the lean world over the years there have been a lot of hammers looking for a nail when it’s not even the nail but the work and the “why?” that needs hammered down. An A3 is a special tool, one that enables us to determine those things. It’s a tool that enables us to identify problems by grasping the current conditions of any situation deeply so we can identify what the real problem is. In what way are we not serving customers as we wish? In what way are we not enabling our company to become stronger? Then we can break that down and understand the reasons why, identify the root cause and then we can develop any number of solutions and countermeasures to make that better. An A3 gives us a nice framework to do all that. It helps us solve problems and create a problem-solving culture all at the same time so it can help us choose the right hammer.